Legal Cannabis Sales Projected At $6.7 Billion For 2016

Legal Marijuana is a growing industry in the United States. The industry as a whole is now valued at $6.7 billion as of 2016, a new report  estimates.

23 states and Washington, D.C., have legalized Marijuana for both recreational and medical use. According to the fourth annual State of Legal Marijuana Markets  sales have surpassed $5.4 billion in 2015, up $4.6 billion from 2014.

The ArcView Group and New Frontier,co-published the report, using data collected from government agencies, legal cannabis businesses, drug law reform advocates, and academic and medical institutions. According to this data the industry as a whole grew 30% on average year over year.

With Federal law far behind state law, medical marijuana has been legalized in almost half, 23 of 50 states. Roughly 86% percent of Americans live in a state that allows some degree of legal cannabis use. A recent Gallup poll finds that 58% of Americans support legalization for adult use, up from 36% ten years ago.

The trend toward legalization is bringing a business that was completely untaxable and part of the black market into the mainstream. Colorado was the first state to legalize for recreational adult use in 2012. After only 2 years the state has brought in $135 million in tax revenue from cannabis sales and licensing fees. Washington state expects to bank approx $636 million in tax revenue.

To illustrate the trend and potential in the legal cannabis industry – ArcView’s investor network poured $45 million into different Cannabis related companies 2015 and plans to invest more this year. Willie Nelson’s new company “Willie’s Reserve”, recently secured an undisclosed sum of private equity. Privateer Holdings which is a cannabis investment firm backed by Peter Thiel’s Founders Fund, raised $75 million to grow its companies. One of their most notable being Marley Natural, run by Bob Marley’s living family members. Snoop Dogg, also launched pot-centric venture fund “Casa Verde Capital” with $25 million as well as his own brand named “Leafs by Snoop”.

According to the report, one of the major hurdles for the industry is banking. Because Marijuana is still federally illegal, banks are careful about working with businesses that are cannabis driven. The report said that about 30% of companies that touch the plant have a functional bank account.

In another nod to the future, the report makes the case that 2016 could be yet another big year for cannabis as an additional seven states will most likely legalize for recreational use: Arizona, California, Massachusetts, Maine, Nevada, Rhode Island and Vermont. Florida, Ohio, Missouri and Pennsylvania will vote on passing medical marijuana laws.

To make the proposition of marijuana business even more exciting, the report claims that by the year 2020, nation-wide sales could reach $21.8 billion.
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